Peace loving Japan exported just shy of 90,000 civilian rifles and shotguns to the USA in 2015, up from 49,000 in 2010. This makes Japan the 11th largest gun exporter to America. Reading through the list of Japanese makers, Howa Corp (6203 JP) said its weapons sales (domestic military and overseas civilian) hit around JPY3.3bn last financial year, a drop of 25.7%. It is expecting another 10% drop this year due to sluggish domestic sales. Weapons make up 18% of the group’s revenue with machinery the bulk of turnover at 42%. The shares have performed pretty well despite the 17%YoY decline in group revenues and Y437mn loss in March 2017. Although in March 2018 fiscal year Howa is expecting a 11% rebound in revenue at Y20.5bn and Y330mn operating profit.
The firearms division is expected to be the biggest drag on profits at -Y190mn in the coming fiscal year. The company is hoping that its real estate investment division will be the big prop up in the turn around at +Y370mn for FY3/18. For all the good will in the company seems to be ripe for a restructuring. The Japanese language business plan can be seen here. It is a stock that trades by appointment but it smells of a company in need of direction.